The Best Source of Innovation

by Lorne Mitchell on 28/01/2016

The news this week that the upwards-ever-upwards iPhone sales are finally stalling was a stark reminder that even the greatest companies struggle to keep the juices of innovation flowing year-on-year. The Apple Watch couldn’t replace the iPhone and the iCar (if it ever arrives) is still a few years out.

Most companies that I study or consult to are in an innovation crisis. They know they must innovate in order to remain competitive and keep growing (or simply to stand still). Yet how often does the innovation agenda become demoted to “novel” efficiency drives and cost-cutting initiatives?

It begs the question: where is the best place to source innovation? Many of my clients in the telecoms world look to technologysuppliers. They continue to develop new features on top of their already bloated stack of products and services that were offered last year. The latest gizmo. The latest bell or whistle. Yet I already have an iPhone 6s. Why do I want a Plus? I upgraded from an iPhone 4s to wait for the 6. I think I’ll hang on until I see something really new and different from Apple.

Innovation can come from suppliers – but you can’t really differentiate your company if that is all you rely on. Such is the fate of many telecoms companies: they continue to develop new features on top of their already bloated stack of product features that were offered last year. The latest gizmo. The latest bell or whistle. A price war starts and the cost cutting initiatives cut even deeper. No, suppliers, are not the best answer.

What about the young folk who have just joined the organisation? Straight out of University or School, they bring a fresh set of thinking. They are the next generation! Surely they hold the answer? Give them a difficult problem and let them brainstorm their ideas to create something truly whacky. Too risky, I say! They will not understand the product and how it is used, yet. They might come up with some good ideas., but Good ideas are not the same as innovation. The newbees are not the best source of innovation either!

So where should we go next? To customers, of course! Customers that use (and misuse) your existing products and services! Customers who suffer day-to-day from trying to work the processes that you have under-designed and waste your customers time and effort. They are loyal customers until they suddenly vanish. And if no one contacts them to see where they have gone, then innovation dies on the vine!

Customers are an incredibly cheap this source of innovation, too. Not just cheap, but very valuable! By asking a few simple questions of customers every time you interact with them, you can increase your profitability, customer loyalty AND innovation in one fell swoop!

And what are those questions? Well, you will have to read the next few Thursday Thoughts to find out my thoughts on this. In the meantime, try and work out what you think they might be and comment below!

Oh, and thank you so much for reading this far. I hope, at least, it has made you think a bit more about one of the most important aspects of business and human life!

Thanks for your very interesting comment, James. Interested to know the source of the guru. It somehow makes sense to ask customers who have moved on – which is what I was hinting at in the main thought. Had not thought of the group of people who weren’t customers yet – but suppose that is something that Sales and Marketing would tackle. In any case, a focus on the “market” of folk who have a need that can be filled by the solution is the frontline of the issue of innovation. For services, I really like the GiffGaff model where they harness the time and energy of their customers to solve the problem of reducing the cost of full-time staff on sales and customer service. Useful food for thought for a future Thursday Thought!

I wish Apple would listen to consumers but they don’t. We don’t need a watch so we don’t have to look at our phones (not like it’s ever in you pocket, who are you kidding?) Tablets in the consumer sector area commodity and i’d rather carry my Macbook Air than hold a screen in the direction of my face. We don’t need a stupid pen for love of Pete! What do Apple customers REALLY want?

Cables that don’t fail after 3 months requiring you to buy yet another shitty licensed cable so your macbook wont buzz incessantly when you buy one at 7-11 that’s 10x the quality. Apple’s annual Shareholder meeting these days looks like a modern rendition of the Emperor’s New Clothes. Since I’m here and griping Apple, how about you let me be a grown up and update my OS when I’m damn good and ready instead of nagging me to death with pop-ups. Each iteration’s spellcheck is “ducking” worse than the one before.

A wise director of Shell once pointed out to a highly-paid group of young, barely out of college, consultants, “We don’t have a lack of ideas, we lack processes for implementing them”.

There’s always a blockage.
– Bureaucracy in big private sector companies who have the cash to implement. ROI is difficult to prove from a sketched idea.
– Impenetrable risk aversion in public sector institutions who need innovation to reduce costs. Nobody gets sacked for doing what they have always done.

So, true, Leonard. Ideas and Innovation are not the same! I remember someone saying that if an idea is worth one point, then a well-defined idea with a proven market is worth 10 points. The same with a business case which can break even in worth 100 points. And an idea that can do all of the above and scale is worth a 1000 points. And even if you have a thousand ideas, they are not the same as the single idea that has a proven market, a business case and ability to scale. Maybe the numbers aren’t right, but it was an interesting idea.

customers provide feedback,e.g., iPhone needing waterproofing, as many people keep them in their back pockets to be discharged into the toilet bowl! But inventors innovate, as a visit to the Patent Office will show. Inventors are original thinkers and they are distinct from designers. Inventors need designers to refine i
deas into practical products.

Thank you, Brian. As a keen promoter of designers, I so agree! Inventors need designers (and organisations with money) to get their ideas off the ground. Somehow the marketplace for these components is not that well organised. Maybe food for a future Thursday Thought. Thank you!

Interesting! Ask the customers. A good idea but how? Also, why not look at the customers. Who are they? What do they want? Is everything measured in size. Cars aren’t. We are given choices, such as model, doors, colour. How about a phone for those who only want it to perform basic functions or customise it or at least be allowed more choice than just its memory size. So much to consider here.

You raise a good point. Apple’s recent sales were disappointing in China, their biggest market. Why,as Aron at BBC said, “because everyone has one”. I have an iPhone, I think it’s iPhone 5 but need to check the specs to be sure. Do I need the next version? Unless it solves a new problem for me, no, this one will still do.
As you state, introducing new devices with more features may be appealing to some. For practical users like me, I look for value and not more features. I probably don’t use many of the features that are already in my iPhone.
So how do the technology vendors innovate? Asking customers what they need works to a point. I am a firm believer that customers don’t know what they need. It has been my experience that by observing how customers perform their tasks, yields true insight into where valuable improvements can be made. Armed with such knowledge, innovators can deliver practical and valuable improvements that will wow customers and compel them to buy. Adding more features is not a good enough to throw away to my perfectly working smartphone.

Jerry – thanks for your reply. You make a very interesting point that “customers don’t know what they need” – a belief that Steve Jobs also had. This seems to be a contradiction in terms. How can the best source of innovation be the customer, yet customers don’t know what they need? I am a keen promoter of the Diffusion of Innovations that classifies customers into different types – some of whom will be the early adopters right through to the laggards. This helps a bit with the contradiction. Another great source is John Seddon’s thinking – with an interesting case here: http://www.managementexchange.com/story/forget-your-people-%E2%80%93-real-leaders-act-system which shows how to both re-design and innovate by looking at customer demand. It is a dance between the innovation engine and a group of customers with a set of needs that becomes the two powerful ingredients. Some call this marketing – but it is more than that, I think.

Customer feedback is a great source of innovation, but really, customer feedback isn’t innovation, the real innovation is the implementation.

Apple is great, they gave us products that work. The software isn’t filled with bugs, and you don’t have to spend a lot of time managing the software. Apple does it for you. iPhones work. Do I really need to replace a new phone that works every 12 to 18 months with one that has marginally better functionality? Not really.

And Apple is busy breaking their contract with the consumer. The ‘lightning cable’ isn’t very robust. We’ve been through at least 10 cables; we have 2 left, and they aren’t Apple’s.

The next iPhone is going to use that same lightning cable as the headphone jack. Wait? Bad cable now attached to an expensive set of headphones? Think again. Now, I actively do not want to upgrade.

Along with their decision to assign any Apple product over five years old to ‘vintage’ and no longer support it? Really?

The contract was “Apple works.” And when it doesn’t Apple stands behind me and helps. Company loyalty = Customer loyalty.

So their growth has slowed. A combination of no one stays #1 forever and breaking the contract they had with their customers.

There are ideas that change the world, no doubt.

But what really changes the world is the ability to execute them well. And execution does not come from customers.

Hi Lorne
It’s a combination of all 3 and more. When Apple / Steve Jobs first came up with the iPad, I don’t think customers knew that they ‘needed’ it, let alone that they wanted it! So Apple was innovating in a direction that the customer had not yet seen, and they did this by looking ahead of the new wireless and touchscreen technology that was coming in and creating a product that combine these 2 successfully.

Whilst some innovation creates needs where none exists (and some will fail because the need is never going to exist!) clean energy is innovation to solve a problem. Take the petrol hybrid technology in say, the new Volvo XC90 T8 or Mitsubishi Outlander PHEV. The old versions were invariably large dirty diesels with all round mpg of c.30 and CO2 emissions of well over 100 gms/km. These latest ones have mpg of 130 to 148 combined mpg with complimentary CO2 emission figures that would only have been dreamed of, say 10 years ago.

The luxury market is where innovation often has its ideas and birthing pains. Take electric car windows. In the 1960’s, everyone had wind downs other than the luxury marques (Rolls Royce, Jaguar etc). Now name me a car that does not have electric widows.

And don’t forget script writers. There are a number of sci fi stories whose ideas were futuristic at the time and now are a reality! For me, one of those domestic robots from iRobot to do the ironing cooking and cleaning would be heaven, providing the Mother Bot doesn’t marry HAL and get ideas about taking over the world!
Regards
Kit